Last week the IRS made an announcement regarding a new wave of attempts to scam foreign banks into giving out American taxpayer account information. According to the Service, scam artists are contacting officials at foreign banks and impersonating U.S. government officials. They will threaten that the bank is in violation of the FATCA rules and make a demand for certain account records. The United States has come out to set the record straight about this matter and assured foreign institutions that they would not be contacted through an informal telephone call or email if there was an issue with regard to the requirements of FATCA and or the bank’s reporting obligations. Are you dealing with a real IRS criminal investigation, or just a scam?
Though these types of phishing scams have been common in the United States, this is the first time that con artists have worked under the guise of being a U.S. tax authority in an attempt to solicit sensitive account information. Foreign banks are more susceptible than ever to the types of scam described by the IRS as they face a steep withholding on transfers through the Untied States if they fail to fully comply with the Foreign Account Tax Compliance Act. To avoid the negative effects of FATCA, foreign banks and their governments have entered into agreements with the U.S. to share account-holder information. The provisions of FATCA that require such sharing went into effect on July 1st of this year.
This is very important to U.S. taxpayers because if the foreign bank falls for the trick, account-holder information such as addresses and phone numbers may be available for illegal use by the same scammers. U.S. taxpayers that have overseas accounts should be careful in responding to correspondence that they receive from their foreign bank or from the IRS. Taxpayers should exercise diligence in determining if the letter or other communication that they received is authentic. If you receive a letter from your foreign bank that requests information or that is suspicious in any way, you should contact an experienced tax attorney to help you determine what the next steps should be.
The government has set up various methods of reporting the fraudulent activity, but if you haven’t reported your foreign account, going to the government about correspondence that you’ve received may not be in your best interest. The Foreign Bank Account Reporting Act mandates taxpayers to report any foreign account that they have that has had, at any point in the year, a balance of $10,000 or more. Failure to comply can lead to hefty penalties and lengthy federal prison sentences.
If you receive a letter from either your foreign bank or the IRS that looks suspicious, it is in your best interest to consult with an experienced tax attorney. The tax professionals at the Tax Law Offices of David W. Klasing have years of experience in assisting taxpayers with FATCA and FBAR-related issues. If you have a foreign account, we can even help you come clean with the government through the Offshore Voluntary Disclosure Program and help you avoid spending years in prison. Call the Tax Law Offices of David W. Klasing for a reduced-rate consultation at (800) 681-1295 today.